Making the intangible connections

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As we increasing move from the old economy activities: managing land, buildings, equipment, inventory, or even financial assets, into the new one of the knowledge economy, intangible assets become the most important aspect to manage effectively and focus upon.

The current knowledge economy is characterised by complex, fast changing dynamic competitive environments. The source of sustained competitive advantage will be knowledge-based and managing the intellectual capital that drives this. This change in business outlook “creates wealth in a radically different way” (Stewart 1997) and offers the potential for higher market to book ratios, among other things.

If you recognize that intangibles of real value eventually manifest themselves into the tangible future cash flows, measuring these we can begin to see the future benefits and highlight the present gaps, so cash flow and growth generation occur in as planned a way as possible.

The first step is to recognize that the present accounting term of intangible assets are really intellectual capital and these offer a far better explanation of the gap between an organizations market and book value than just goodwill. It is the value gap that needs leveraging so the market appreciates this and then further values the organizations actions on dealing with intellectual capital as the real worth of the business.

The ability to perform successfully in the future needs innovation capital and this needs a comprehensive build.

When you combine insight (customer &/or market understanding) with flexible organizations that allow more autonomy to its members they have the scope (empowerment) to collect information, interpret it and interact more in a ‘networked’ effect for collaboration and generating and sharing their ideas. Having these factors in place, we have the opportunity for increasing innovationcapabilities and strengthening knowledge and social capital over time.

It is not just producing knowledge but also rather building the competences (new human capital) to recognise, combine, obtain, employ, and engage in knowledge building to create innovation.

The organisation has to recognize that by combining resources with knowledge gives entrepreneurial talent and growing organizational competencies for intellectual capital that leads to increased innovation capital- the life blood for the future growth of the organization.

We need to recognise, to engage in making the intangible connection as the critical aspect of our thinking to generate that higher level of valuable innovation. We can help.